New Directions

Outsourcing – It’s a bad thing

We have heard a lot about outsourcing, i.e. hiring people in other countries to do work that used to be done here, in the past few years.It would be understandable if some people thought that this was a recent phenomenon; however, outsourcing in America has roots that go deep into our past.I don’t think we called it outsourcing then; we just said that jobs were being lost as businesses were closing down. Here is an example:

Beginning in the 1800’s New England experienced a financial boom based upon the industrial revolution. Factories were built by the hundreds. The town of Lowell, Massachusetts was built as a model of the new industrial society, with dormitories provided for factory workers, many of whom were imported from other countries because these factories could not find enough labor in the United States.Factories throughout New England eventually manufactured almost everything you could imagine, from shoes, wool, textiles, and linen to structural steel, copper wire, and high tech abrasives.However, by the 1950’s and into the 1960’s the factories began to close and the model factory town of Lowell became a synonym for a slum town.The major manufacturing city of Worcester, Massachusetts saw factory after factory close, with perhaps the greatest blow coming when its massive United States Steel plant closed.But where did all the jobs go?

They went south. They went to states like North Carolina and others where new factories were built and a flagging economy, that had yet to recover from the Civil War, saw a boom that led to nearly full employment and the beginning of an economy based upon something other than agriculture.The industrial jobs of the prosperous north had been outsourced to the indigent south. Why? Because the factory owners had determined that as the cost of employing people in the north increased they were making less and less profit.The south was a source of cheap labor and therefore an opportunity to return to the glory days of maximum profit.The outsourcing of jobs from the north to the south was a bad thing for the north, but a good thing for the south, wasn’t it?It was also a good thing for the factory owners – at least for a while. What about the overall American economy? Was it a good or bad thing overall?You might say that the north’s loss was the south’s gain and I think you would be mostly correct. I think that, for a closed economic system like the eastern U.S., outsourcing was, overall, a neutral economic activity, although it certainly inflicted a lot of pain – and happiness- in specific places.

Moving on to the 21st Century, a new type of outsourcing has occurred.The new outsourcing sends U.S. jobs to foreign countries, where the workers are paid much less than American workers, but the owners of the companies can return, once again, to the glory days of maximum profits.In this round of outsourcing we see the textile mills in North Carolina closing and new ones opening in China, India, and lots of other places. In the north, which transitioned to a high tech based economy after the loss of the mills, we see high tech jobs being outsourced to China, India, and lots of other places.In the new outsourcing, American jobs have been lost in both the north and the south. There is good news, however. You can now go to Wal-Mart and buy a pair of $60 Levis for only $20.

Eventually this sort of thing has to have consequences. One of these is that the owners of the companies are now making truly massive profits. It is better even than the old glory days.Money is pouring into the U.S.Is this a good thing? I don’t think so because the money isn’t really going into the overall economy; it’s going into the bank accounts of the owners of the companies.Fortunately, there are service jobs at places like Starbucks that seem to be immune to outsourcing. Lots of skilled American workers eventually have to settle for something like these and now make just enough money to pay for a $20 pair of Levis at Wal-Mart.

The new outsourcing doesn’t have an overall neutral effect on the average American like the old outsourcing; it makes their quality of life worse.The reason the new outsourcing is a bad thing is that, unlike the U.S. economy, the global economy is not a closed system.It is an open system.Money that flows out of the U.S. economy doesn’t flow back into it – instead it just winds up in the bank accounts of the ultra-rich.

I suppose then that it is not correct to say that no one benefits from outsourcing, because they do… It just isn’t you.

Like this:

Related

3 Responses

I’d like for you to keep an open mind regarding some aspects of SMALL BUSINESS outsourcing.

Yes, giant company outsource US Jobs to overseas labor for cheap and that hurts people.

But what about the INTERNET as a global connector and community for people to find people with skills and services and form partnerships that are beneficial?

For a solo entrepreneur using the internet and trying to do all the work him or herself is a cause for great burn out.

Since employees cannot be hired due to high costs of labor, what is wrong with going overseas to work with skilled people who will work for less?

There is a lot more I could say on this, but short on time here, so if anyone knows someone looking for solid and GOOD advice about outsourcing, I welcome you to pass on my site: http://www.outsourcesecretsrevealed.com.

Outsourcing may/may have negative impacts to society. Nevertheless, it helps connect businesses at a cheaper costs. It also allows other nationality to work on big companies abroad. It is indeed a great help to competent individuals who can handle the job very well even if they are not Americans.

Follow My Blog via Email

Enter your email address to follow this blog and receive notifications of new posts by email.

Join 22 other followers

Visitor Count

144,294 hits

The Viral Epiphany

My new book, a thriller about a deadly worldwide pandemic caused by cloning an extinct virus is available as a digital download for Kindle readers at Amazon.com. Guaranteed to make you think. Click on the cover image to go to the Amazon download page.